Increased net sales orders, home closings, and average community count steered Taylor Morrison Home Corp. to a positive third quarter, as the company continued the eventful day of builder financial reports.
The Scottsdale, Ariz.-based builder saw net sales orders rise to 1,635, which is an 18% jump for 2014’s third quarter. Closings rose 28% to 1,700 and the community county climbed comparably—29% when compared to last year—to 276 average communities. Adjusted for capitalized interest, home closings gross margin was 21.2%.
Still, though, J.P. Morgan’s Michael Rehaut expects a slightly negative reaction to the results, as the company adjusted its business outlook for the 2015 year, and posted 3Q EPS of $0.37—in-line with Rehaut’s estimate and slightly below the Street’s of $0.40.
The company modestly lowered its 2015 guidance, Rehaut notes, as it now expects average community count of 255-265 versus 260-270 previously, closings of 6,300-6,500 versus 6,600-6,800 previously, adjusted gross margins in the low to mid-21% range versus just under 22% previously and SG&A of about 10% versus under 10% previously.
The reason for the outlook adjustment, Rehaut says, could be because of labor constraints. “While 2015 closings guidance was lowered, likely driven by these same labor issues,” he says, “we view 3Q’s solid performance as a positive and note that 3Q closings were within TMHC’s guidance range.”
Taylor Morrison recently acquired three
business units from Orleans Homes, which, Taylor Morrison's President and CEO
The builder posted $796 million in the quarter and Palmer likes where her company stands moving forward.
"I'm encouraged by the long-term market fundamentals, which continue to support a positive and sustained trajectory in our industry,” she adds. “Although conditions may vary market-by-market and quarter-by-quarter on both a micro and macroeconomic level, we believe that these issues are manageable, that concerns over labor constraints will subside over time, and that the strength of the underlying market fundamentals will emerge as we look to the end of the year and into 2016."